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Jones v. Suburban CJ of AA, LLC

United States District Court, E.D. Michigan, Southern Division

April 17, 2017

Vicky Jones, Plaintiff,
Suburban CJ of AA, LLC, Defendant.

          Stephanie Dawkins Davis Mag. Judge


          JUDITH E. LEVY United States District Judge

         Before the Court is defendant Suburban CJ of AA, LLC's motion for judgment on the pleadings. (Dkt. 9.)[1] A hearing was held on the motion on April 11, 2017, and oral argument was heard.

         For the reasons set forth below, defendant's motion is granted.

         I. Background

         On September 8, 2016, plaintiff purchased a 2016 Dodge Charger for $37, 889.46 plus taxes and fees, and a Chrysler Service Contract for $930. (Dkt. 11 at 2.)[2] She made a down payment of $1, 000 and requested financing for the remaining balance. The installment sales contract executed between the parties identifies plaintiff as “buyer” and defendant as “seller-creditor.” (Id. at 18.) The terms required plaintiff to make monthly payments of $635.35 beginning October 8, 2016. (Id. at 19.) It also stated that “Dealer may assign this contract and retain its right to receive a part of the finance charge.” (Id. at 20.)

         That same day, plaintiff also completed an application for Michigan title for the vehicle. The application listed CPS, Inc. as the “First Secured Interest.” (Dkt. 11 at 22 (Ex. B).) Plaintiff alleges she believed CPS, Inc. to have already approved her financing because she was allowed to take delivery of the vehicle that day, and because its name was listed on the title application. (Id. at 3.)

         Defendant filed the application for Michigan title, and then provided plaintiff with a Certificate of Title, dated September 12, 2016, that listed CPS, Inc. as the “First Secured Party.” (Dkt. 11 at 3, 24 (Ex. C).)

         On September 14, 2016, CPS, Inc. allegedly notified defendant that it rejected financing for her vehicle purchase. Defendant's employees then allegedly contacted plaintiff to advise her of problems with her financing, informed her that they were attempting to secure financing with another entity, and requested plaintiff return the vehicle. Plaintiff refused to do so. (Dkt. 11 at 3.)

         On September 22, 2016, plaintiff allegedly received a letter from defendant, indicating it had cancelled her Chrysler Service Contract. (Dkt. 11 at 4.) At the hearing held on April 11, 2017, defense counsel informed the Court that defendant had mistakenly cancelled the contract on September 20, 2017, and had reinstated it on October 10, 2017.

         Four days later, on September 26, 2016, plaintiff filed a complaint against defendant for allegedly acting in violation of the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Motor Vehicle Installment Sales Contract Act, and was liable for misrepresentation/fraud and breach of contract. (Dkt. 1.)

         On September 28, 2016, defendant contacted plaintiff, stating it would finance the sale and requested plaintiff sign a new application for title. That same day, plaintiff allegedly received a letter from Ally Financial, denying her financing for her vehicle. (Dkt. 11 at 4.) On October 2, 2016, plaintiff allegedly received a similar letter from AmeriCredit.

         On October 11, 2016, plaintiff received a letter from defendant, which stated the finance contract had not been assigned to an outside lender, and confirmed defendant would be the lienholder. (Dkt. 11 at 4- 5, 26 (Ex. D).) The letter instructed plaintiff to submit payments of $635.35 by the 9th of each month to “Suburban Chrysler Dodge Jeep Ram of Ann Arbor, Attention: Cynthia Melnik, 2060 West Stadium Blvd., Ann Arbor, MI 48103, except for the first payment which is due on 10/21/2016.” (Id. at 26.)

         On or about November 4, 2016, plaintiff was allegedly informed by CPS, Inc. that it would provide financing, and defendant then allegedly declined to finance the transaction. (Dkt. 11 at 5.) On November 7, 2016, defendant executed a contract with CPS, Inc. through which CPS, Inc. agreed to purchase the financing contract executed on September 8, 2016. (Dkt. 9-3 at 2.)

         After these events transpired, plaintiff filed an amended complaint to include new allegations and amend the claims under the Equal Credit Opportunity Act and Motor Vehicle Installment Sales Contract Act. (Dkt. 11.)

         II. Legal Standard

         “The standard of review for a Rule 12(c) motion is the same as for a motion under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.” Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 722 (6th Cir. 2010). “For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.” Id. (quoting JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir. 2007)). The allegations “need to be sufficient to give notice to the defendant as to what claims are alleged, ” and they must state a plausible claim for relief. Id. (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         III. Analysis

         Defendant argues plaintiff failed to state a claim on all counts. (Dkt. 9 at 2.)

         Count I: Truth in Lending Act

         Plaintiff argues defendant violated the Truth in Lending Act (“TILA”) in the following ways:

• Failing to accurately disclose the finance charge in violation of 15 U.S.C. § 1638, 12 C.F.R. § 226.18(d);
• Failing to disclose and itemize the amount financed in violation of 15 U.S.C. § 1638, 12 C.F.R. §§ 226.18(b)-(c);
• Misstating the annual percentage rate in violation of 15 U.S.C. § 1338, 3 12 C.F.R. § 226.18(e);
• Failing to disclose the applicable APR in violation of 15 U.S.C. § 1638, 12 C.F.R. § 226.18(32)4, and 12 C.F.R. § 226.22.

(Dkt. 11 at 7.)

         Additionally, plaintiff argues that any disclosures made were “illusory” because defendant reserved the right to unilaterally change the terms of the contract. (Dkt. 11 at 8.) Defendant argues that the installment sales contract demonstrates that all terms were disclosed in accordance with TILA, and no terms of the financing have been altered. (Dkt. 9 at 10.)

         TILA, 15 U.S.C. § 1638 et seq., was enacted to “assur[e] meaningful disclosure of credit terms to consumers.” Baker v. Sunny Chevrolet, Inc., 349 F.3d 862, 864 (6th Cir. 2003). To promote that end, “the statute must be considered liberally in the consumer's favor.” Id. 15 U.S.C. § 1638(a) requires a creditor to make certain disclosures, including the amount financed, an itemization of the amount financed, the finance charge, and the finance charge expressed as an annual percentage rate.[5] These disclosures must be made “before the credit is extended.” 15 U.S.C. § 1638(b)(1).

         Regulation Z, 12 C.F.R. § 226.1 et seq., is a regulation “promulgated . . . to implement TILA, ” and “prescribes the form in which a creditor must disclose the items pursuant to 15 U.S.C. § 1638.” Baker, 349 F.3d at ...

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